Ground Zero Construction, Inc. v. Walnut Creek, LLC

2012 Ark. 243, 410 S.W.3d 579, 2012 WL 1950241, 2012 Ark. LEXIS 264
CourtSupreme Court of Arkansas
DecidedMay 31, 2012
DocketNo. 12-15
StatusPublished
Cited by6 cases

This text of 2012 Ark. 243 (Ground Zero Construction, Inc. v. Walnut Creek, LLC) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ground Zero Construction, Inc. v. Walnut Creek, LLC, 2012 Ark. 243, 410 S.W.3d 579, 2012 WL 1950241, 2012 Ark. LEXIS 264 (Ark. 2012).

Opinion

ROBERT L. BROWN, Justice.

| ,The issue on appeal is whether the 75-day lien notice sent by appellant, Ground Zero Construction, Inc. (Ground Zero), complied with the requirements of Arkansas Code Annotated section 18^44-115(e)(2)(C)(i) (Supp.2007), which requires that the notice contain a “general description of the labor, service, or materials furnished.” We agree with the circuit court that the notice did not comply, and we affirm.

On July 27, 2006, appellee Metropolitan National Bank (Metropolitan)1 and Walnut Creek Properties, LLC (Walnut Creek), which at that time was known as R & R Partners, |2LLC, entered into a Construction Loan Agreement in the amount of $13,150,000, for the development of a commercial subdivision in Benton County. Walnut Creek executed a promissory note in the principal sum of $13,150,000.2 The note was secured by a mortgage, which conveyed a mortgage lien on the Walnut Creek property, and which was filed for record on July 28, 2006.

On June 19, 2007, Ground Zero entered into a contract with Rees Development, Inc. (Rees), for the construction and improvements of the water and sewer for the subdivision.3 The total price for the construction and improvements of the water and sewer was $1,935,851.83. Of the total owed, Ground Zero had received a total of $1,651,738.97 by May 6, 2008, leaving a balance due of $284,112.86.4

On June 2, 2008, Ground Zero, by means of a 75-day-lien notice sent in accordance with section 18-44-115(e)(2), informed Rees and Walnut Creek that it was seeking a lien “in connection with sums owed and unpaid for labor and materials provided to you in connection with the Walnut Creek properties.... ” On January 20, 2009, when Ground Zero did not receive payment on the balance due, it filed a complaint against Walnut Creek, LLC; R & R Partners, LLC; Rees; Walnut Creek; Marrs Electric, Inc.; Morrison Shipley Engineers, Inc.; ^Hutchens Construction Company; Traffic and Control Lighting Systems, LLC; Metropolitan; and the City of Rogers in the Benton County Circuit Court. Ground Zero alleged in that complaint that the work performed by it was commenced on the property prior to any liens or mortgages being filed of record and that its lien constituted a first lien on the property, which was superior to any interest of the named defendants. On January 26, 2009, Ground Zero filed its first amended complaint.

The separate defendants, including Metropolitan, each entered appearances. Pertinent to this case, Walnut Creek, LLC; R & R Partners, LLC; Rees; and Walnut Creek, collectively naming themselves “Walnut Creek Defendants,” filed an answer to the First Amended Complaint on March 13, 2009. On March 6, 2009, in lieu of answering the complaint, Marrs Electric filed a motion to dismiss Ground Zero’s lien claim, alleging that Ground Zero had not complied with the notice requirements of section 18-44-115 because Ground Zero failed to include a proper description of the work allegedly done on the property.

On May 5, 2009, the circuit court held a hearing on Marrs Electric’s motion to dismiss. At the hearing, Ground Zero asserted that its description of its work in its lien notice complied with the notice requirements of the statute, and it added an alternative argument that the notice requirements of section 18-44-115(e)(2) do not apply to it because it is a contractor and not a material supplier or laborer. On May 21, 2009, after considering the arguments of counsel, the circuit court entered an order granting Marrs Electric’s motion to dismiss Ground Zero’s complaint as to the foreclosure of its lien. In that order, the circuit court stated that the notice requirements were to be strictly construed and found that Ground |4Zero failed to provide the description of work done as required by the statute. Ground Zero’s contract action remained intact, however, and on September 9, 2009, Ground Zero was awarded judgment in the amount of $284,112.86 for breach of contract, plus prejudgment interest, costs, and attorney’s fees.

On April 80, 2010, the circuit court entered an order wherein it found that the lien claims of Marrs Electric; Hutchens Construction Company; Morrison Shipley Engineers, Inc.; and Traffic and Lighting Systems, LLC, were superior to the mortgage held by Metropolitan. These lien claimants later released their liens against the property. In a decree and judgment entered on February 4, 2011, Metropolitan was granted a judgment against Walnut Creek in the amount of $15,016,836.27, plus interest, and it was specifically found that Metropolitan’s mortgage lien was the first lien on the property and that the interest held by Ground Zero on account of the judgment rendered in its favor was subordinate to that mortgage hen. After a final order was entered, Ground Zero filed this appeal.

For its sole issue on appeal, Ground Zero urges that its description of the “labor, service, or materials furnished” contained in its notice of lien, which consisted of the phrase “in connection with ... labor and materials provided to you in connection with the Walnut Creek properties,” was an adequate description under section 18 — 44—115(e)(2)(C)(i). Ground Zero contends that the purpose of the materialmen’s lien statute is to protect the owner of the land and, therefore, it would be unnecessary to require a company in Ground Zero’s position to describe the labor or services provided more fully because Walnut Creek obviously knew what the claim involved. It continues that Walnut Creek had already paid Ground | ¡¡Zero over $1.6 million under the contract for its work on the water and sewer improvements in the subdivision. Ground Zero claims, in sum, that if the notice requirements are for the benefit of the owner, then the purpose, spirit, and letter of the statute were completely fulfilled by the description contained in the lien notice provided on June 2, 2008.

Ground Zero, alternatively, maintains that section 18^44 — 115(e) (2) is not even applicable in the instant case because the 75-day-notice requirement applies to material suppliers and laborers, and Ground Zero asserts that it is a contractor, not a material supplier or laborer. Ground Zero further emphasizes that notice is required to be given to both the owner and the contractor under section 18^4 — 115(e)(2). Thus, Ground Zero maintains it would be absurd to apply the notice requirements to it as a contractor because it would then be required to give notice to itself.

Section 18-44-115(e)(2) provides in part:

(2)(A) No material supplier or laborer shall be entitled to a hen unless the material supplier or laborer notifies the owner of the commercial real estate being improved, in writing, that the material supplier or laborer is currently entitled to payment but has not been paid.
(B)(i) The notice shall be sent to the owner and to the contractor before seventy-five (75) days have elapsed from the time that the labor was supplied or the materials furnished.
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(C) The notice shall contain the following information:
(i) A general description of the labor, service, or materials furnished, and the amount due and unpaid;

Ark.Code Ann. § 18 — 44—115(e)(2) (Supp. 2007) (emphasis added).

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Bluebook (online)
2012 Ark. 243, 410 S.W.3d 579, 2012 WL 1950241, 2012 Ark. LEXIS 264, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ground-zero-construction-inc-v-walnut-creek-llc-ark-2012.